Citation

Discussion Paper Details

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Title: Two to Tangle: Financial Development, Political Instability and Economic Growth in Argentina (1896-2000)

Author(s): Nauro F. Campos, Menelaos Karanasos and Bin Tan

Publication Date: October 2008

Keyword(s): economic growth, financial development, political instability, power-ARCH and volatility

Programme Area(s): Public Economics

Abstract: This paper investigates the effects of financial development and political instability on economic growth in a power-ARCH framework with data for Argentina from 1896 to 2000. Our findings suggest that (i) informal or unanticipated political instability (e.g., guerrilla warfare) has a direct negative impact on growth; (ii) formal or anticipated instability (e.g., cabinet changes) has an indirect (through volatility) impact on growth; (iii) the effect of financial development is positive and, surprisingly, not via volatility; (iv) the informal instability effects are much larger in the short- than in the long-run; and (v) the impact of financial development on economic growth is negative in the short- but positive in the long-run.

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Bibliographic Reference

Campos, N, Karanasos, M and Tan, B. 2008. 'Two to Tangle: Financial Development, Political Instability and Economic Growth in Argentina (1896-2000)'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7004